The US Securities and Exchange Commission (SEC) has charged Rivetz for an $18 million ICO it had conducted earlier. The regulator has said that the funds procured were not utilized the way they should have been. SEC alleges that $1 million raised from the ICO was given to the founder and he used $2.5 million from the ICO money to buy himself a house in the Cayman Islands.
Rivetz was founded in 2013. The company has been into selling blockchain hardware. However, now the company is not active. Between July and September 2017, Rivetz had raised $18 million via an unregistered securities offering. It had over 7,200 investors.
In a complaint on Wednesday, the SEC said that the company has sold RVT tokens which were promoted as a securities token. It was presented as an investment opportunity to lure investors. The SEC said the RIVETZ positioned the ICO in way that it claimed that the RvT tokens were “investments that purchasers could buy and sell on the secondary market.”
“Token buyers could not purchase any goods and services using RvT tokens, and the tokens had no other use in any Rivetz product or service. In fact, several months after the tokens were distributed […] Sprague stated on social media that Rivetz did not have ‘a specific release date’ for the Rivetz app through which consumers could use the RvT token,” claims the SEC.
The SEC complaint charges the ICO creators and Rivetz founders. It claims that the founder was given $1 million from the proceeds and “a separate loan of $2.5 million, which he used to purchase a house in the Cayman Islands that he then leased back to Rivetz Int’l.”
Recently, the SEC has been strict with compliance. Earlier this week it also threatened to sue the world’s biggest cryptocurrency exchange Coinbase for non-compliance.